• NO AUSTERITY BUT NO VAT RATE CUT
• UK ‘CHAPTER 11’ BECOMES LAW
• DELAY HARMS SCOTTISH RETAILERS
• VW LOOKS TO BUY EUROPCAR
• AUTO TRADER TO WORK WITH EBBON-DACS
• FRENCH CAR SALES RECOVER
• INCHCAPE AUSTRALIA RESHUFFLE
• STOCKWATCH – Lookers, Caffyns, Pendragon down
• COMING UP – Lookers AGM, Scottish retailers reopen
• JLR IN GOVERNMENT LOAN TALKS
• LOAN STRUGGLES A RETAILER OPPORTUNITY

No austerity but no VAT rate cut

Prime Minister Boris Johnson will in a statement on Tuesday reject austerity and promise a ‘decade of investment’ to help the economy recover – but chancellor Rishi Sunak has indicated plans will not include a cut in VAT or other taxes.

Mr Sunak said this is not a typical economic crisis where incomes are impaired, because of the support from the furlough scheme. “Psychology is the challenge” in persuading consumers to spend, he said to Bloomberg TV.

VAT cuts and other stimulus are likely to be held in reserve until after businesses reopen on 4 July, so the government can assess how the economy recovers. It was believed the chancellor was planning an emergency Budget for later in July but there has not yet been any confirmation of this.

Instead, Mr Sunak will follow the PM’s Tuesday announcement with his own address next week. Measures will include initiatives to reskill the unemployed and help the Government meet net zero carbon goals.

There has been no indication whether the latter will include any electric car-focused scrappage incentives.

https://bit.ly/389zk8T

 

 

UK ‘Chapter 11’ becomes law

The Corporate Governance and Insolvency Bill has become law. Similar to US Chapter 11, it helps support struggling but viable companies by giving them a moratorium of 20 days (extendable to 40) to produce a rescue plan. Winding up petitions and statutory demands are delayed.

Companies qualify by being unable to pay their debuts but can demonstrate they would emerge from a rescue as a going concern qualify.

Directors can also trade through the emergency period without the threat of personal liability.

“The Bill will help companies that were trading successfully before the Covid-19 emergency to protect jobs and put them in the best possible position to bounce back,” said business secretary Alok Sharma.

https://bit.ly/3i62r1g

 

Delay harms Scottish retailers

The unexpected delay in allowing Scottish auto retailers to reopen means businesses will have incurred further substantial losses, the NFDA claims. A lack of clear communication meant some retailers bought staff back from furlough early in anticipation of reopening in early June and are now facing a huge financial burden.As businesses finally reopen today (Monday, 29 June), the NFDA has urged the Scottish government for better engagement with the automotive sector going forward.

 

VW looks to buy Europcar

Volkswagen is in talks to buy French car rental firm Europcar, say sources. Talks are preliminary and a deal is “far from certain”. It would be a reversal for Volkswagen which sold Europcar for €3.32bn in 2006. A new deal would be at a significant discount: Europcar has a market capitalisation of €390m and net debt of over €1m.The car rental industry has been badly hit by the coronavirus crisis: US rival Hertz filed for bankruptcy in May.

https://reut.rs/3g8sTp0

 

Auto Trader to work with Ebbon-Dacs

Auto Trader is to use Ebbon-Dacs’ electronic vehicle delivery and collection tool, moDel, for its new Auto Trader Moves vehicle collection and delivery service. The company claims moDel is the UK’s largest such service with over 340k vehicle movements in 2019, 21% up on 2018. Jobs are handled on a reverse auction basis through a network of 300 suppliers and 1,600 drivers, saving retailers £31 per vehicle movement, claims Auto Trader.

https://bit.ly/2NyDr4I

 

 

WORLD NEWS

French car sales recover

French new car sales are expected to have recovered to almost normal levels in a sign government incentives are working. These took effect from 1 June and include a scrappage-style scheme and extra incentives for electric car buyers. June figures will be announced on 1 July.

 

Inchcape Australia reshuffle

Inchcape Australia has appointed Subaru MD Colin Christie, a 24-year Inchcape veteran, as overall MD. He will oversee Subaru in Australia and New Zealand, PSA in Australia, plus Inchcape’s auto retail and AutoNexus businesses. Christian Dinsdale takes over as Subaru MD and Kate Gillis becomes general manager of Peugeot Citroen Australia.

https://bit.ly/3g4Vmw1

 

 

STOCKWATCH

Closing prices on 26 June 2020 and weekly change

Lookers, Caffyns, Pendragon fall

Auto Trader Group 533.0p 545.8p (-12.8p / -2.3%)

Cambria 52.5p (n/c)

Caffyns 260.0p (-39.2p / -14.0%)

Halfords 151.4p (-17.2p / -10.7%)

Inchcape 488.8p (-9.0p / -1.8%)

Lookers 19.8p (-3.1p / -14.5%)

Marshall Motor Holdings 122.5p (+3.75p / +3.1%)

Motorpoint 263.0p (+6.0p / +2.3%)

Pendragon 9.21p (-1.21p / -12.3%)

Vertu 27.0p (+0.1p / +0.3%)

 

COMING UP

Monday, Lookers AGM

Monday, Scottish retailers open

Monday, UK Q1 GDP and economic accounts

Tuesday, Nationwide house price index

Wednesday, VRA AGM

 

MONEY MATTERS

JLR in government loan talks

Jaguar Land Rover is understood to be one of six strategically important businesses in advanced talks with the Government for financial support. The ‘Project Birch’ scheme is for companies not eligible for other government loans because they lack investment-grade credit ratings.

https://on.ft.com/2Zk3iCK

 

Personal loan struggles a retailer opportunity

Consumers are finding it harder and more expensive to access unsecured personal loans due to economic uncertainty tightening credit, says MotoNovo deputy CEO Karl Werner. This is an opportunity for dealer finance which, although not immune, is more consistent and accessible, due to the nature of HP and PCP finance.